Microsoft CEO: Abandoning fans in push to the cloud was 'mistake'

Microsoft CEO Satya Nadella has described his decision to "abandon" the company's consumer fans as one of his most significant mistakes. Under his leadership, Microsoft has pushed towards an enterprise focus at the expense of its most dedicated customers.

This month, Microsoft killed off its Groove Music streaming service and then admitted Windows 10 Mobile is as good as dead. To the company's small but loyal fanbase, these events seemed to be the latest sign of Microsoft's growing disinterest in being a consumer tech provider. There have even been rumours Microsoft could axe its relatively successful Surface hardware business next.

"Unconsciously" abandoning customers

Nadella recently addressed the discontent he's stirred up amongst Microsoft fans. As spotted by Windows Central, he discussed the challenges he's faced as CEO in an interview with business podcast Marketplace. The interview, held to celebrate Nadella's new book Hit Refresh, was recorded before Microsoft announced the Groove Music closure and Windows 10 Mobile news.

Asked about his most significant recent mistake, Nadella chose to touch on the subject of pursuing enterprise ambitions at the expense of isolating consumer fans.

HP / Microsoft

Explaining that he didn't see a place for a third mobile platform, Nadella said he decided to steer Microsoft "to the next turn" of cloud, AI and mixed reality. He admitted the company approached these new challenges with a "shiny object" focus, implying they caused Microsoft to forget its obligations to support its already-launched consumer services.

"If you missed something you… look at what's the next turn. We're excited about the cloud… and [mixed reality and AI]," Nadella said.

"In many cases, customers have already chosen to work with you, and yet you consciously or unconsciously abandon them to go work off on the new shiny object."

Transforming for the future

Microsoft's now positioning itself as a digital transformation provider above all else. It's repeatedly signalled it's no longer interested in trying to find an audience for its languishing consumer services.

However, the firm's reluctance to give fans the facts has alienated its loyalist customers and created confusion. In the four years since Nadella became CEO, Microsoft's consumer services have rarely seen attention. Many products have either been prematurely cancelled or forced into obscurity.

In the long term, these events could harm Microsoft's ambitions if it's seen to be uncommitted to long-term success strategies. Although the company's decision to focus on the cloud may appear to be a considered strategic move, it raises questions about how Nadella will respond if Microsoft falls behind or a new, even bigger technology emerges.

Walking away from the smartphone era could have implications that aren’t yet apparent. Down the line, enterprise customers might be reluctant to invest if they perceive Microsoft to be overly opportunistic.

Cutting the losses and moving on

Right now, the possibilities presented by digital transformation, cloud services and IoT are too great for Microsoft to pass on. With Windows phones going nowhere and use of services like Groove believed to be very low, Microsoft's evidently decided to assign all its resources to its most successful businesses.

Nadella's not afraid to cut losses and move on to new markets, a strategy that keeps Microsoft innovating on the edge of technology. For now, it's happy for Apple, Google and Spotify to fight over its customers, even if the fans themselves feel it's giving up too early.